2026 Federal Budget – what you need to know
May 2026 | Insights | Claire Jones
On the positive side…
DGR endorsement – becoming a ‘community organisation’ just got easier
Going forward, for entities seeking endorsement as community charities, the Government will remove the requirement for ministerial declaration, suggesting that applications will be able to go directly to the Australian Taxation Office.
This should significantly decrease approval times for this category of DGR.
DGR endorsement – more specific listings
The budget papers announced the specific listing of 7 new organisations (CEW Bean Foundation, Council of First Nations Ltd, Hakoah Club Ltd, Jewish Education Foundation (Vic) Ltd, Sydney Harbour Federation Trust, Sydney Harbour Foundation Limited and Virtual War Memorial Limited) from 1 July 2026 and the ministerial declaration of two organisations (the Jewish Community Foundation and Australian Jewish Funders) as approved to seek DGR endorsement from the Australian Taxation Office as community charities.
On the other hand…
Family trust donations no longer tax exempt
The new 30% minimum tax rate on discretionary trusts may have the effect of reducing amounts received by charities from these trusts.
While public and private ancillary funds (giving funds) remain income tax exempt, non-charitable discretionary trusts, such as family trusts, are caught.
The credit for tax paid by trusts is non-refundable to the beneficiary, meaning that charities and other income tax exempt entities may not be able to claim that tax back from the Australian Taxation Office. This effectively imposes a 30% tax rate on income received by charities through a discretionary trust.
This appears to be an unintended consequence, as it does not align with government policy commitment of “fostering a robust, well‑regulated charity sector that serves communities across Australia” (Assistant Minister for Charities, Dr Andrew Leigh MP, Media Release Helping charities and strengthening communities 20 February 2025).
CGT – will higher rates stifle philanthropy?
The time of disposal of capital assets is often when individuals make significant philanthropic donations or establish private ancillary funds (giving funds). A higher tax rate on capital gains arising for individuals has the potential to reduce the available philanthropic funds around Australia.
When this measure is combined with the previously announced increase in distribution rates for giving funds, we may see a reduction in coming years of the number of giving funds established in Australia – an unfortunate result when Government is committed to increasing philanthropy in Australia.
We remain committed to advocating for the philanthropic and charities sector and will engage in consultation with Treasury regarding the impact of these measures on charities.